Secrets for Success at Smaller Firms

By Nicsa posted 03-09-2021 01:12 PM


If history has taught us anything, it’s that even the largest firms in the asset management industry had to start somewhere. So how can today’s smaller firms follow in their footsteps, gaining market share against the current backdrop of fewer resources and continued consolidation?


Attendees of Nicsa’s Strategic Leadership Forum took a deep dive into this topic during a session moderated by Kevin Mahn, President and CIO of Hennion & Walsh Asset Management.


“We have some modern-day Davids taking on the Goliaths in the asset management industry here with us today,” Mahn said of the panelists, who hailed from Foreside, Ironwood Capital Management, and O'Shares ETFs. “I can’t think of a better group to describe the unique journeys that smaller firms take to gain market share, increase sales, and continue to grow.”


Connor O'Brien, CEO and President at O'Shares ETFs, has grown his firm to $1.6 billion AUM with four ETFs over the last six years.


“Product differentiation has been key to our success,” he said. “A lot of the biggest ETF companies are essentially providing a generic set of products — the typical indexes that everybody knows of. Our index rules are designed to identify companies and stocks that have failing business models, declining profitability, and deteriorating balance sheets, and keep them out.”


Alison Sanger, COO at Ironwood Capital Management, said her firm successfully pivoted over the years — specifically around 2008 to 2009 when the group began serving the mass-affluent marketplace. Sanger said Ironwood wasn’t the first firm to cater to that sector’s needs, but it has been one of the more successful in getting products to market.


“We had to change everything about the way we did business, but we didn’t change anything about the way we handled investments,” Sanger said. “Our investment team viewed the core product that we made the same, but we adapted how we packaged our product for the shelf. We were an early adopter of this approach, and that has been part of our path to success. It has allowed us to stay relevant with our flagship fund and this newer fund, which we see more broadly distributed in the marketplace.”


As Senior Director at Foreside, Sonja Formato has provided firms with compliance consulting services for years.


“From a best practices perspective, you need to understand who you are — you can’t be everything to everyone,” she said. “You want a cohesive approach across your distribution resources, bringing together the field, the home office, and marketing messaging.”


Formato said it’s essential to be committed with your resources — leveraging technology and outsourcing where it makes sense for your firm. “And you need to be flexible,” she said. “What COVID has taught us is that you need to be able to respond to change.”